Ethanol helps keep gas prices down

With the price of gas skyrocketing and passing $4 per gallon in many parts of the country, ethanol plays a more important role in our energy economy in two separate ways, according to the National Corn Growers Association - by keeping gas prices from getting even higher and by providing a U.S.-based fuel option.

"A number of studies have detailed how ethanol lowers gas prices by as much as 40 cents a gallon," said NCGA President Bart Schott, a corn grower in Kulm, N.D. "It does this by using a renewable domestic resource that keeps money in the U.S. economy rather than sending it overseas."

Merrill Lynch determined in 2008 that without ethanol, oil and gas prices would rise by 15 percent, today that would translate to over 50 cents per gallon. Growth in ethanol production between 1995 and 2007 caused gas prices to be 29 to 40 cents lower per gallon than would otherwise have been the case, according to LECG. And an Iowa State University study in 2008 found that if ethanol were removed from the world supply, oil prices would increase by an estimated 27.5 percent, or $29 per barrel.

In addition, Schott pointed out, the Institute for Local Self Reliance reports that 75 cents of every dollar spent on biofuels recirculates through the local economy while 75 cents of every dollar spent on oil exits the local economy and, in most cases, the country.

"In looking at our economy, at our high unemployment and federal budget deficit in particular, it is important to stop exporting American jobs and money," Schott said. "Ethanol supports hundreds of thousands of jobs and provides tens of billions of dollars to our national Gross Domestic Product."

According to an analysis of ethanol's economic impact by Cardno ENTRIX, an international environmental and natural resource management consulting firm, the production of 13 billion gallons of ethanol means that the U.S. needed to import 445 million fewer barrels of oil in 2010 to refine gasoline, roughly the equivalent of 13 percent of total U.S. crude oil imports. The value of the crude oil displaced by ethanol amounted to $34 billion in 2010. This is money that stays in the American economy.